Is SFX Entertainment on the Verge of Bankruptcy ?

Is SFX Entertainment on the Verge of Bankruptcy ?

The stock price of SFX Entertainment continues to fall, on August 20 it was down 24% to RP 0.79. Wall Street’s Seeking Alpha suggested that SFX was running out of cash and likely headed to bankruptcy.

The beleaguered EDM promoter’s SFX Entertainment share price continued its freefall on Thursday (August 19), tumbling 24% to RP 0.79 after it filed an official termination to its go-private deal and calls for its RP 7.8M termination fee.

The Wall Street writer, Alpha Exposure, believes the firm has cash flow problems and suggests that the popularity of EDM festivals has peaked. SFX’s portfolio includes festival brands such as Tomorrowland and Mysteryland.

“If people were purchasing more tickets, we would expect an increase in Deferred Revenues. The opposite is happening for SFXE, which indicates that ticket sales are likely declining,” says the post.

SFX CEO Robert Sillerman insists he still intends to take the company private despite having missed the deadline for the original deal, but the site casts doubt on this claim.

“We believe SFXE is under significant financial duress,” says the Seeking Alpha article. “It is quickly burning through cash and has limited financing options. We believe the company is on its way to bankruptcy and that Robert Sillerman’s latest interest in taking the company private carries little weight.

“We believe management has stepped away because they can see that SFXE is going to go bankrupt.”

Since May, the stock has declined to its all-time low and SFX has agreed with Sillerman to keep open a bidding period for the company until October 2 deadline to hear offers for the company in whole or in part which includes a period that would take in the firm’s peak festival season.

Courtesy of Thirst4beats